Danaher stock flirted with a breakout Tuesday on the back of its unexpectedly strong sales from its molecular testing services.
The company's molecular testing division, Cepheid, beat sales expectations by about $100 million, William Blair analyst Matt Larew said in a report. Cepheid offers PCR tests that scan for numerous diseases including respiratory infections, blood viruses and cancer. Danaher says Cepheid likely gained market share during the quarter.
And that wasn't the only bright spot for Danaher stock. Bioprocessing orders rose by a high single-digit percentage sequentially, suggesting a recovery in the industry is ongoing. Danaher also reiterated its guidance for the year.
The results are a "stark contrast" to bioprocessing peer Sartorius which, last week, cut its full-year outlook, Larew said.
"Danaher maintaining the guide (particularly bioprocessing at a low single-digit core decline) stands in stark contrast to Sartorius' print/guidance cut last week," he said. "And as we said then, we view their guidance cut more as playing catch-up to the realities of the space than being indicative of further deterioration."
On today's stock market, Danaher stock surged 5.3% to 264.18. Shares briefly rose as high as 272.98, breaking out of a flat base with an entry at 269.11, according to MarketSurge.
Danaher Stock: Bioprocessing Is A Silver Lining
Overall, Danaher brought in $5.74 billion in second-quarter sales, beating FactSet-polled analysts' call for $5.59 billion. Sales fell 3% year over year. On an organic basis, revenue declined 3.5%.
Bioprocessing sales were $1.71 billion, ahead of Street expectations for $1.64 billion, RBC Capital Markets analyst Conor McNamara said in a report. Diagnostics sales — which includes Cepheid — came in at $2.26 billion, north of forecasts for $2.16 billion.
Only life sciences sales missed. In that division, $1.77 billion in sales were just below projections for $1.79 billion.
"We view the results as positive for Danaher and the overall life sciences tools (and bioproduction) sector, especially after the Sartorius guidance cut," McNamara said.
He kept his outperform rating and 297 price target on Danaher stock.
Full-Year Guidance Maintained
Danaher kept its outlook for core revenue to decline by a low single-digit percentage. Bioprocessing and life sciences sales are expected to fall by low single digits, while diagnostics sales are projected to climb that much, Evercore ISI analyst Vijay Kumar said in a client note.
"Overall, we thought these results reaffirm the recovery thesis and should allay the fears (post peer guide down)," he said.
He rates Danaher stock an outperform with a 260 price target.
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